Annual House Price Drop Hits 14-Year High While Rate Surges Pose Big Challenge for Mortgage Renewals

Hey there,

We’ve just completed Q1 of 2023 and so we are back with our next newsletter

House prices, the state of the rental sector, mortgage rates - it’s all here.

Enjoy the read!

Housing Market Updates

• House prices saw the?biggest annual fall?in nearly 14 years, reports Nationwide. Down by 3.1%, the?average house price?stood at ￡257,122 in March.
• Though the monthly decline between February and March was just 0.8%, house prices have slumped 4.6% from their peak in August last year.
• Based on Nationwide's data, the housing market in Scotland experienced the largest decline, with a decrease of 3.1% in house prices. On the other hand, the West Midlands region was the most resilient, with an increase of 1.4% in house prices.

• Zoopla, another organisation that tracks house prices, has also published its?latest house price index, and it shows?similar trends?to the data released by Nationwide.

- Average UK house price: ￡259,700

- Annual drop: 4.1%

• According to Zoopla’s March house price index, several locations in London saw the average house price fall since Q1 of 2022. The top 4 in the list by Zoopla are:

1. Westminster????1.2%
2. Aberdeen??? 1.1%
3. Kensington and Chelsea??? 0.5%
4. Moray??? 0.3%

• Zoopla’s report also shows that the strongest growth was seen in?Oldham, with a?significant increase?of 7.4% since the previous year.

Psst.?It's important to note that while the final statistics may be similar, the datasets used by Nationwide and Zoopla to calculate their house price indices are different. Therefore, it's essential to interpret and analyse the findings of each report in their respective contexts.

• New research conducted by the Alliance Fund?revealed that in the 14 days leading up to the publication of their report on March 10th, a total of 87,345 homes were listed on the market.

However,?things aren’t what they seem in the housing market.?Here’s a different perspective.

• A?survey of construction businesses?found that the activity in the housing sector declined in March this year at the fastest pace since May 2020.
• This could be attributed to a combination of factors, such as high mortgage rates leading homebuyers to reconsider their priorities, and increasing building costs due to high energy costs and rising staff wages.
• It should be noted that while the Bank of England officially announced?new bank rates on March 23rd, the industry had prior knowledge of the expected hike. And for sure, that must have forced builders to take a step back, yeah?
• Talking about surging mortgage rates, here’s something that’s unlikely to make one happy. About ￡236.8 billion worth of old, “cheap” mortgage deals are?ending this year. Around 1.7 million borrowers will be affected?as a result.
• The last time they fixed their mortgage the bank rate was 0.1%. And now, the bank rate is at 4.25%. You can imagine how the renewed deals could cause monthly repayments to skyrocket.
• Not very good news for renters either, as the number of homes available for rent in the UK has dropped by a third over the last 18 months.
• According to Zoopla,?rental demand?is more than?50% above normal levels. The drop in listings has increased rent for new tenants by 11%. People continue to look?for affordable options with no luck while stuck in expensive homes.
• Renting in London has been the worst. And it has only become worse over time.
• Research by Alan Boswell?finds that London renters?pay more than half their monthly wage on rent. More than half! ??
• Though the monthly income for Londoners is higher than in any other region at ￡2,798, the median rental cost is ￡1,500 per month. The share of income paid for rent in London’s most expensive boroughs rose to above 80% for a two-bedroom rental.

??'Hood in the spotlight: Folkestone, Kent

A landmark decision by the Folkestone & Hythe District Council

A new garden town development in Kent was given the green light by the Folkestone & Hythe District Council.

The developer, Otterpool Park LLP, will oversee the construction of approximately 8,500 homes as part of the housing project.

Here’s the project outline:

• 8,500 homes of various types and tenures, including over 1,870 affordable homes and more than 400 self-build homes.
• 50% of the site will be open space.
• Integrated transport network to and from the garden town.
• Electric vehicle charging points.
• Up to 29,000 m2 of retail space.
• Up to 87,500 m2 of commercial space.
• Up to 67,000 m2 of education and community facilities.
• A maximum of 8,000 square metres of hotel space.
• Leisure space of up to 8,500 m2.

Hailed as a "landmark decision", this looks like a welcome development project.

Read more about it?here.

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